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U.S. Futures Tumble, Havens Gain in Risk-Off Wave: Markets Wrap

U.S. Futures Tumble, Havens Gain in Risk-Off Wave: Markets Wrap

(Bloomberg) — U.S. and European futures tumbled and haven assets climbed on Monday, returning markets to last Thursday’s risk-off mode, spurred by worries over a second wave of infections that could dash hopes for a V-shaped recovery.

Futures on the S&P 500 slid over 3% at one point, and European contracts were down more than 2%. Japanese, Australian and Hong Kong stocks also slumped, with South Korea sinking 4% plus. The dollar climbed along with the yen, and Treasuries advanced. Crude oil crumbled. The moves suggested the stabilization on Wall Street Friday in wake of a near 6% stock slide may be temporary.

“We’ve gone risk-off because the reality of the U-shape pick-up” is hitting home, David Bloom, global head of foreign-exchange strategy at HSBC Holdings Plc, said on Bloomberg TV. “It’s a U-shape pick-up, and it’s going to be slow and patchy” he said of the recovery.

Chinese economic data Monday showed the world’s second-largest economy had a smaller bounce back in May than economists had expected, with retail sales continuing to drop and industrial output rising less than forecast.

On the virus front, more than 20 U.S. states are seeing a pick-up in cases, Tokyo reported a jump over the weekend and a fresh outbreak in Beijing prompted officials to close a market there.

“The risk is that, globally, we get a second wave,” said Chris Iggo, the chief investment officer for core investments at AXA Investment Managers. “Now is the time to have that long-duration bond exposure in the portfolio.”

These are some key events coming up:

Policy decisions from the Bank of Japan, Bank of England and the Swiss National Bank are due this week.China on Monday releases industrial production and retail sales data for May.CBOE plans to open its trading floor, which has been electronic only since March 16.Federal Reserve Chairman Jerome Powell delivers his semi-annual policy report to Congress.

These are some of the main moves in markets:

Stocks

S&P 500 futures fell 2.7% as of 7:18 a.m. in London. The S&P 500 advanced 1.3% on Friday.Japan’s Topix index was down 2.5%.Hong Kong’s Hang Seng fell 2.1%.Kospi Index dropped 4.4%.Shanghai Composite was down 0.6%.Australia’s S&P/ASX 200 Index, which tumbled almost 5% the previous two sessions, was down 2.2%.Euro Stoxx 50 futures retreated 2.4%.

Currencies

The yen rose 0.2% to 107.22 per dollar.The offshore yuan slipped 0.2% to 7.0936 per dollar.The euro was at $1.1236.The Bloomberg Dollar Spot Index rose 0.5%.

Bonds

The yield on 10-year Treasuries fell about five basis points to 0.66%.Australia’s 10-year yield fell five basis points to 0.86%.

Commodities

West Texas Intermediate crude dropped 4.9% to below $34.48 a barrel.Gold was at $1,720 an ounce, down 0.6%.

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